Nigel Wilson, CEO of Legal & General, said: “Despite the fact that the UK is a great place to invest, thirty years of underinvestment have led to poor productivity, low real wage growth and numerous market failures.

“Affordable housing is a classic example of underinvestment with minimal new equity capital being deployed to the sector.

“This is not a sustainable position – either for the sector or for the 1.3 million households currently on a waiting list.

“This important sector has now been added to Legal & General’s £15bn UK direct investment programme.”

Simon Century, Head of Affordable Housing, added: “Many housing associations are becoming increasingly highly leveraged, as they have funded significant amounts of development through debt funding for many years.

“They have no ability to raise equity and maintain a sustainable financial structure – therefore forcing many to significantly limit their growth ambitions. Legal & General Capital is building a more natural and sustainable model – one in which institutional investors are the long-term holders of the assets working alongside the best-in-class affordable housing operators who will provide the highest-quality housing management.”

L&G will be targeting all areas of the affordable housing market, including new build Section 106 and grant-funded affordable rent, social rent and shared ownership units.